The proposed research investigates how young children establish social interaction with their peers. What skills from the parent-child relation are useful in peer interaction? What is the progression of peer interaction in a group situation? Do normal and handicapped children follow the same progression or do they acquire skills by different routes? Two playgroups, one of handicapped, and the other of normal children will meet mornings for eight months. Prior to the first session, a home assessment will be made of the children's social competence with adults. The children's play will be video-taped regularly throughout the year. Analyses of the tapes will provide information on mutual eye contact turn-taking signals, and specific interactions including show qualitative, as well as quantitative advances in the children's peer interactions. Several manipulations of the social and material environments examine the role of context in early social behavior. While aimed at basic questions, the research will yield knowledge relevant to problems facing contemporary American society. Given recent trends in child-rearing patterns, it is essential to discover the ramifications of group care on the health and functioning of very young children.